Key facts
- Oil prices rose approximately 2% following an incident in the Strait of Hormuz.
- A cargo ship was struck by an unknown projectile near Oman, raising supply concerns.
- Kuwait plans to increase oil production to 2 million barrels per day within a week.
- US Energy Secretary Chris Wright stated that approximately 20 million barrels of crude oil passed through the Strait of Hormuz in the last day.
- Mines in the Strait of Hormuz are hindering the full resumption of oil transport.
Oil prices saw a roughly 2% increase on Thursday, driven by renewed supply concerns after a cargo vessel was struck by an unknown projectile near Oman while attempting to transit the Strait of Hormuz. This incident has cast doubt on the speed of oil flow normalization in the Middle East, which had been showing signs of recovery. Kuwait, heavily reliant on the Strait of Hormuz for its exports, anticipates boosting its oil output to 2 million barrels per day within a week, a significant rebound from its May average of 573,000 bpd.
US Energy Secretary Chris Wright reported that approximately 20 million barrels of crude oil transited the Strait of Hormuz in the past 24 hours, nearing pre-war levels. However, he noted that Iranian mines in the waterway are hindering a full resumption of transport, a process that could take several weeks. Analysts at Rystad Energy warned that if tanker traffic does not improve, Middle Eastern producers may need to reduce output, potentially delaying a full recovery until next year.
The preliminary agreement between the U.S. and Iran to end the war has facilitated the reopening of the Strait of Hormuz, which Iran had previously blockaded. US Secretary of State Marco Rubio has assured Gulf allies that their interests will be considered in any final deal with Iran. Despite potential sanctions relief, Goldman Sachs does not foresee a substantial increase in Iranian crude production, as EU and British sanctions remain in place, with China expected to be the primary buyer.
UBS has revised its Brent price forecasts downward, anticipating $85 per barrel for the end of September and December, and $80 per barrel for the end of March and June 2027. The recent price strength is also attributed partly to technical buying, as markets were oversold following a rapid decline from recent highs, according to Gelber & Associates.
In other global energy news, thousands are feared dead in Venezuela following two powerful earthquakes. Separately, Iraq is reportedly considering leaving OPEC if the organization does not permit a significant increase in its oil production, a move that would represent a blow to the cartel.